Banking UP

The first version of the Compass Principles  is available for download from the Center for Financial Services Innovations’ website.

The principles apply generally to the design of consumer financial products intended to help people in their daily lives.

The first category of financial products to benefit from a detailed implementation of the Compass Principles will be prepaid card accounts.

Here are some of the specific items that my company, Plastyc,  will deploy during the next few quarters to implement the Principles:

• Make accounts easier to access with free full-featured Mobile Apps for Android phones ,  iPhones and Kindle Fire tablets, for consumers who may not have a fixed phone line and PC at home;
• Make accounts easier to open with automatic handling of soft-fails via add-on questions during enrollment, for consumers who may not have easy access to a photocopy and fax machine to send us copies of utility bills to prove their identity;
• Display product fees clearly with typical usage patterns inside a standardized “Fee Box“, to be transparent and reassure customers that we will not hit them with unexpected fees;
• Expand real-time communication with cardholders through mobile push notifications, to allow customers to always stay on top of their finances;
• Reduce time and cost of customer support through contextual interactive help, to avoid lengthy searches through solutions among  Frequently Asked Questions;
• Reduce time and cost of customer support through a collection of how-to-videos, to make learning about our services more fun and immediate;

I think that applying good product design principles pro-actively beats any kind of regulation. So kudos to the authors of the Compass Principles whitepaper.

The US Federal Reserve has just released a report about how consumers use mobile financial services.

The full report can be found here.

It contains a substantial section about how the under-banked population uses mobile phones to access financial services.

Just because people are un-banked or under-banked, does not mean that they are “unphoned”.

Mobile phone use is high among younger generations, minorities, and those with low levels of income—groups that are prone to be unbanked or underbanked.Mobile banking and mobile payments have the potential to expand financial access to the unbanked and underbanked by reducing transaction costs and increasing the accessibility of financial
products and services.

Although the report contains some contradictory numbers, it mentions that 91 percent of the underbanked have a mobile phone and 57 percent have a smartphone—rates far above those for the overall population.

As mentioned in an earlier post, we found that over 85% of the UPside Visa prepaid card users have a smartphone.
So we have just deployed a mobile banking application for both Android phones and iPhones.

Many in the payment industry have complained that fees for payment cards or for checking accounts are difficult to figure out.  So much so that respectable institutions like Bretton Woods and Consumers Union have published contradictory conclusions about which products are the least or the most expensive, while looking at pretty much the same set of products.

I have been arguing that fees are usually fairly explicit and can be found on websites or on paper agreements sent by mail to account holders. Evidently, the current action by the State of Florida against a number of prepaid card providers shows that there is still some improvement to be made in the quality of disclosures. Nevertheless, the most important factor in the impact of fees tends to be forgotten: how will people actually use the product?

That’s why we have introduced recently an interactive fee calculator on the iBankUP website. The calculator allows people to specify how they intend to use our payment  service.

We ask 7 questions to our visitors:

1- how much $$ will you direct-deposit to the card every month?

2- how many cash deposits will you make per year (using a Green Dot MoneyPak)?

3- How many cash withdrawals will you make from ATMs every month?,

4- How many bills will you pay (i.e. by writing checks) per month?

5- How many PIN-based purchase transactions are you likely to do every month?

6- Are you accident-prone? How many times per year will you attempt to spend more than you have?

7- How often do you think you will need to call customer support and speak with an agent?

Once a visitor to the site has answered the seven questions, a simple press on the “Calculate” button will produce the total sum of fees that the user would incur during an entire year. Of course, we also show how much fees some of our competitors would have charged based on the same behavior.

You can try the calculator by clicking here.

We also explain the math behind the calculator in an accompanying document.

We sure hope that others in the industry will  do the same and publish their own calculators for all to see.

Amar’e Stoudemire makes the 2010 All-Star  and expands Each One Teach One national campaign

Busy week for Amar’e Stoudemire who was voted center for the West starting lineup for the the All-Star Game to be played Feb. 14 at Cowboys Stadium in Arlington, Texas.
Earlier in the week, Stoudemire was in Memphis, where he partnered with City Councilman Myron Lowery to bring attention to the Amar’e Stoudemire Each One Teach One Foundation National Financial Literacy Program.

“Teenagers have to be financially responsible. We created this education program to give youth tools and an interesting place to learn how to make good decisions. Councilman Lowery’s great leadership helps create solutions and opportunities for students today and in the future”

said Amar’e Stoudemire.

Stoudemire and Councilman Lowery announced their efforts to bring Financial Education to the youth of Memphis from the National Civil Rights Museum on January 17. “I enjoyed learning more about such an important time in history. It was inspiring to be reminded that each person can make a positive impact in the life of a person, community or country. I hope this Financial Literacy Program will help teenagers and their families improve their lives,”

said Stoudemire after his first visit to the museum.
Here is a brief outline of Amar’e Stoudemire Each One Teach One Foundation National Financial Literacy Program:

PART ONE: ONLINE CLASSES

Students and their parents can walk through the Free Financial Literacy Classes that are geared toward education 13-18 year olds on topics ranging from “Car Buying 101,” “Credit and Debit,” “Financial Aid,” “Home Buying,” “Savings and Investing,” “Understanding Insurance” and “Budgeting for College.” Teenagers receive certificates at the end of each on of the classes.

PART TWO: FINANCIAL TOOLS

Frustrated with bank fees and the opportunist nature of credit cards, Mr. Stoudemire sought out a financial partner, Plastyc, Inc., which shared the common goal of helping people learn financial responsibility. Together, they created a unique Visa prepaid debit card that provides a safe place for youth to learn about budgeting and money management with out risk of overdraft or high interest rates. By leveraging Mr. Stoudemire’s celebrity, this team has been able to successfully get the attention of an underserved market of at-risk consumers.

Under the new federal Credit C.A.R.D. (Accountability Responsibility and Disclosure) Act of 2009 taking effect on February 22, 2010, people under the age of 21 will have limited ability to get a credit card in their name, making the importance of a prepaid debit card even greater for teenagers and young adults.

PART THREE: IN SCHOOL INSTRUCTION

For the past year, Mr. Stoudemire has focused on getting both public and private schools to integrate financial education into their curriculum. By creating lesson plans and easy to follow steps, administrators and teachers have been able to get their students inspired to learn these important life skills. In addition, youth who are interested in getting involved on their own can do so free of charge.

For more information about this program or to get involved, please go to AmareStoudemire.com.

“Convenience”, “courtesy”: two of the reassuringly warm-and-fuzzy names given to bank fees devised to puncture your checking or card account.

Learn about how banks penalize their customers for being… their customers: check the “Aggravation Fees” article on the Huffington Post.